Hanjin containers clog Southern California ports

Thousands of chassis in and around the ports of Los Angeles and Long Beach have containers mounted on them that are either owned or leased by the now insolvent ocean carrier Hanjin Shipping.

Hanjin containers clog Southern California ports

Thousands of chassis in and around the ports of Los Angeles and Long Beach have containers mounted on them that are either owned or leased by the now insolvent ocean carrier Hanjin Shipping.

Hanjin containers clog Southern California ports

Thousands of chassis in and around the ports of Los Angeles and Long Beach have containers mounted on them that are either owned or leased by the now insolvent ocean carrier Hanjin Shipping.

 
The Hanjin bankruptcy has created a shortage of chassis in Southern California at the busiest time of year for many shippers and their truckers.
    Thousands of chassis in and around the ports of Los Angeles and Long Beach - the two largest container ports in the U.S. - have containers mounted on them that are either owned by Hanjin or leased by the Korean carrier. In many cases, shippers or truckers are having trouble returning those containers to terminals or container yards, so the chassis are not available for use.
    “The chassis situation is still what I would call critical,” said Weston LaBar, executive director of the Harbor Trucking Association, which represents drayage companies in Southern California.
    He estimates at least 10,000 chassis out of a little more than 100,000 chassis in the region cannot be used because they have Hanjin containers sitting on them.
    “Other ports are talking about hundreds, here it is thousands,” he noted.
   In an update that was filed with a bankruptcy court in Newark, N.J. on Sept. 22, Hanjin said it did “not assert any interest in containers that it does not own or are the subject of a sale-lease-back agreement,” but added it had not settled issues relating to the sale-lease-back agreements.
    In the same filing, Hanjin told the court it “advised customers that they should contact the owners of the containers to arrange for inland delivery and their return. As to Hanjin owned containers, Hanjin is finalizing a lease for property located near New York City for the return and storage of Hanjin containers. Hanjin also is working diligently to find space on the West Coast for the return and storage of its containers. Moreover, Hanjin has been working with more than 70 marine terminals and off-dock container yards to arrange for return and storage of Hanjin-owned and Hanjin-leased containers. As of the date hereof, Hanjin has been advised by more than 40 of such terminals and yards that they are now at full capacity.”
    “When Hanjin declared bankruptcy, the trucking community saw a real dire situation that they would be facing,” said LaBar, noting that for many of his members’ largest clients, this is the peak season for receiving cargo.
    Even prior to the Hanjin bankruptcy, he said truckers were concerned that there were already a large number of chassis in need of repair. He estimated that between Hanjin’s problems and “out of order” chassis, 18 to 25 percent of chassis in the region might be unavailable.
    “We’ve been pretty disappointed with the allotment of chassis in the pool of pools,” he said. “Because repairs were not being made at the pace that they should, we were concerned there were not going to be enough chassis for companies to continue to do operations as they should.”
   Noel Hacegaba, managing director and chief commercial officer at the Port of Long Beach, said his port as well as the Port of Los Angeles are attacking the chassis shortage in two ways: first by encouraging the largest source of chassis in the region - the so-called “pool of pools” created by the leasing companies DCLI, Flexi-Van and TRAC Intermodal - to repair containers at a faster clip, and secondly by trying to find locations where containers owned and leased by Hanjin can be stored.
    The pool of pools has about 74,000 chassis, and 700 returned to service in just the past week. The percentage of “bad order” chassis has fallen to 7.6 percent from 9 percent in the past two weeks, and Hacegaba said leasing companies are continuing efforts to speed repairs.
    There are about 10,000 Hanjin containers “on the street” and another 5,000 containers at terminals, he estimates. Many containers are at Pier T in Long Beach, which is operated by Total Terminals International (TTI). Hanjin’s 2015 annual report notes it owns 54 percent of TTI. Meanwhile, other containers are scattered among at least five other terminals in the two ports where Hanjin or its space sharing partners in the CKYHE Alliance - COSCO, “K” Line, Yang Ming and Evergreen - operate.
    LaBar said some larger trucking companies do have the ability and space to put Hanjin containers on ground and continue to use chassis, but he said for small and medium size draymen, “they have run out of space and may not necessarily have the ability to ground Hanjin containers, so for them, the chassis situation is critical and they are looking for some true relief.”
    It is not clear exactly what percentage of the Hanjin containers in Southern California are leased and what percentage are owned.
   But many are leased from Triton International, the world’s largest container lessor, formed recently through the merger of Triton Container and TAL International.
    At a presentation to securities analysts last week, Triton said it had 87,010 containers (with 148,108 TEUs of capacity) on-hire to Hanjin with a net book value of about $243 million.
    Triton also said it was seeking to gain control of those containers and redeploy them as quickly as possible.
    With leased containers, LaBar said there is some opportunity to return those containers, but he said some locations designated by leasing companies for returns “filled up quickly.”
    “You get some in and out, but they still tend to be pretty much fully utilized," LaBar said. "It’s not like there is a large amount of these leased boxes that are able to be returned at this point in time.”
   Phillip Sanfield, a spokesman for the Port of Los Angeles, said the port has been able to reach a number of short term agreements with terminals and other businesses to store containers - mostly containers leased to Hanjin - in and around the port. However, Sanfield noted acreage is limited in and around the port. He also expressed how solving the issue has become a top priority for the port and Gene Seroka, its executive director.
    Bigger storage facilities are being set up away from the port in the area popularly known as the “Inland Empire” where many warehouses are located, Sanfield said.
    Hacegaba said Saybrook Capital, which is affiliated with the drayage company Total Transportation Services Inc., is making land available in Ontario, Calif. for storage of containers that are leased to Hanjin, but not owned by Hanjin. His understanding was that 50 acres would become available initially, and perhaps eventually as many as 200 acres, for storage of those containers. Ontario is located about 50 miles from the port.
    “I don’t think that does anything for the trucking community unless that is a termination yard,” said LaBar. “From our understanding, you drop your box 50 miles from the harbor and you pay $15 a day on storage. That is not a solution to the issue.
    “It may be a good business move for Saybrook Logistics, but it is not a solution for many of the drayage firms that operate in the San Pedro Bay complex,” he said, adding that it might cost $500 to pay a driver to move the container to Ontario.
   Hacegaba understood that Intermodal Cartage also had plans to open a storage facility in Fontana, Calif., another location in the Inland Empire about 75 miles from the port. His understanding is that Intermodal Cartage will accept containers both leased and owned by Hanjin.
    In regards to his trucker group, LaBar said, “We’ve been upfront in that if the land is just for storage and the trucking company has to pay for storage, it is not a solution. There needs to be a termination point for those boxes and the trucking company must be able to terminate the interchange on the equipment. Otherwise, all that is happening is that the trucking company is paying for storage of the box and continuing to be saddled with that responsibility and that is not a solution.
    “We have no idea when this situation will begin to subside so you have no idea how long you would be paying storage for those empty containers,” he explained.
    LaBar and Hacegaba said they understand none of the marine terminals in Los Angeles and Long Beach are accepting Hanjin owned boxes, including TTI's terminal at Pier T.
    Hacegaba said that since Hanjin has declared bankruptcy, ships that are actually owned by Hanjin have been loading empty containers, but ships that are chartered by the company have not.
   “The last vessel that called TTI (and departed this past Tuesday) did not take any empty Hanjin boxes back,” Hacegaba said.
    Two vessels operated by fellow South Korean carrier Hyundai, have or are scheduled to evacuate containers that were leased by Hanjin from the TTI terminal, Hacegaba said.
    “One vessel, the Hyundai Forward, called at CUT (California United Terminals in the Port of Los Angeles) to discharge inbound containers and then berthed at TTI (in the Port of Long Beach) to take empty Hanjin-leased containers last week, Hacegaba said. He also said the Hyundai Platinum was scheduled to do the same and was scheduled to depart TTI yesterday.
    TTI’s website had a notice in capital letters at the top of its internet home page on Monday morning which read, “TTI IS NOT ACCEPTING HANJIN EXPORT OR EMPTY CONTAINERS THROUGH THE GATE - NO EXCEPTIONS. TTI IS CURRENTLY SHORT CHASSIS (ALL SIZES)."
    LaBar said, “They say they are at capacity and say they do not have the space for them. We feel they have a moral responsibility to make arrangements. They do not feel that way at this point in time. They have not stepped up to the plate to offer a solution and that is a travesty.
   “My understanding is the Port of Long Beach continues to have discussions on this issue, the problem is no one wants to take responsibility for the Hanjin-owned containers. Nobody knows how long this situation will continue to unfold and continue to be an issue in the port."
    The Harbor Trucking Association has its own fleet of about 250 chassis, and normally 50-60 percent are utilized. Today, utilization is over 100 percent, he said, as the association was able to get an additional 80-100 chassis through a joint venture it has with ChassisFinder, a company owned by Milestone.
    “We are completely leased out of 40-foot chassis,” said LaBar and the company is seeking to add equipment.
    LaBar said the Harbor Trucking Association and California Trucking Association have sent joint letters to the ports of Long Beach and Los Angeles, informing them of how critical the issue is and to tell them how a long term, permanent solution is needed.
    In addition, LaBar contrasted the situation in Oakland where he said the Port of Oakland made land available to the terminal operator SSA for Hanjin containers.
   “SSA stepped up and they are accepting them as a termination point," LaBar said. "So they are storing those containers. But, like I said, they are dealing with 600 containers in Oakland compared with 10,000-plus in LA and Long Beach.”
    Speaking about Hanjin, LaBar said, “You have a foreign entity that knew they were in this position. They continued to take advantage of small American companies in the drayage firms, and they left them with the bag.”
    Hanjin owes millions of dollars to local trucking companies for store door moves, said LaBar, because it was not unusual for shipping companies to be 90-100 days delinquent in making payments.
    “They have saddled local trucking companies with this Hanjin empty issue," LaBar said. "They took advantage of them and now we have local trucking firms that may be looking at whether they can stay in business or not based on what a foreign entity has done. It’s not right and I hope the American bankruptcy courts understand that the decisions they are making may have grave implications for some American companies."
We are no longer facing a future highway maintenance crisis. We ’ re living it. Every day we fail to invest we ’ re putting more lives at risk, and truck drivers are on the front lines.
Spot container rates from Shanghai to the U.S. West Coast stood at $1,834 per FEU as of Feb. 15, while rates from Shanghai to the U.S. East Coast totaled $2,968 per FEU, down 8 percent and 2.8 percent, respectively, from a week prior, according to the Shanghai Containerized Freight Index.
Most Popular
Latest News
Social Media

Loading...

Using APIs to deliver e-commerce duty transparency

Using APIs to deliver e-commerce duty transparency

Embed this story

Share Code Version 1

This version will embed the story headline and includes HTML fallback protection, ensuring the story will display even if some users decide to disable javascript in their browsers.

Code:

Copy & Paste the following code to embed this story on your website.

Preview

Hanjin containers clog Southern California ports

Thousands of chassis in and around the ports of Los Angeles and Long Beach have containers mounted on them that are either owned or leased by the now insolvent ocean carrier Hanjin Shipping.

By Chris Dupin on Oct 3, 2016AmericanShipper.com

Share Code Version 2

This version will embed the story headline without any styling applied. Use this version if you will use your own custom styling on your website. This version also includes HTML fallback protection.

Code:

Copy & Paste the following code to embed this story on your website.

Preview

Hanjin containers clog Southern California ports

Thousands of chassis in and around the ports of Los Angeles and Long Beach have containers mounted on them that are either owned or leased by the now insolvent ocean carrier Hanjin Shipping.

By Chris Dupin on Oct 3, 2016AmericanShipper.com